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Small UK Firms Face Hurdles but Remain Optimistic

The fourth quarter SME Growth Tracker, a report by Capital Economics commissioned by Amazon UK and Enterprise Nation that assesses growth prospects and views on the broader UK economy from small and medium-sized enterprises (SME), finds that SMEs have increased their growth expectations for the coming 12 months, despite losing some confidence in their business prospects and the broader UK economy. The report is based on a YouGov survey of more than 1,000 SMEs across the UK.

SMEs project revenue and jobs growth despite concerns over business conditions in 2017
SMEs forecast revenue growth of +1.8% and employment growth of +0.8% over the coming year, compared with a prediction of +1.5% for revenue growth and +0.7% in employment growth in the Q3 tracker. SMEs around the country also predict their profits will rise by +1.1% over the coming year compared with 0.2% over the last 12 months. In particular, SMEs in the East of England, South East, and West Midlands, and those in the financial sector, professional services, and IT & Telecoms sector, are forecasting the highest revenue growth.

This is amidst the confidence of SMEs dimming as they head into 2017. The SME Confidence Index score has fallen from +5 in Q3 to -4 in Q4 for their own companies, -2 to -9 for their respective industries, and -13 in Q3 to -15 for the wider UK economy. SMEs in London, the North West and the South West expect business conditions to deteriorate the most for their business in the coming year, with the SME Confidence Index scores for their business of -10, -10 and -11 respectively in Q4.

Emma Jones MBE, founder of Enterprise Nation and HM Government’s Crown Representative for Small Business, said: “Britain’s small businesses play a crucial role in driving our economy, and are the most driven, adaptable, and resilient you will ever meet. With the right support, like lower rates, easy access to finance, and digital opportunities which boost exports and productivity, you’ll continue to see them grow year-on-year.”

Limited Brexit impact, but SMEs think it could hurt growth over the next 12 months
Almost three quarters (74%) of SMEs have not delayed any business decisions as a result of Brexit, showing only a marginal change since SMEs were polled in the Q3 tracker (77%). Twenty-six per cent of SMEs said they had delayed business decisions as a result of Brexit, up slightly from 23% in the Q3 tracker.

Mark Pragnell, Chief Project Economist, Capital Economics, commented: “Although a majority of SMEs see the consequences of Brexit as a risk over the next twelve months, Brexit isn’t everything. A bigger number ofSMEs see euro-zone instability, a fall in domestic demand, higher price inflation and a global recession as greater risks to their business.”

Ecommerce users more confident and expecting stronger revenue growth
SMEs that use ecommerce have an SME Confidence Index score for their own business of -2 compared to non-ecommerce users who have a score of -7. They expect overall revenue to increase by +2.1%, compared to SMEs who do not use ecommerce who predict lower revenue growth of +1.2% in 2017.

One-in-four SMEs also believe ecommerce will boost their sales at Christmas, whilst one-in-five also believe it will allow their employees to spend more time with their families during the holidays.

“What we’re hearing is that SMEs see a lot of opportunity in the year ahead, but equally some hurdles as they navigate potential changes in the economic landscape,” said Doug Gurr, UK Country Manager, Amazon. “Investment in proven growth drivers like ecommerce and exports and a focus on boosting productivity, help best position SMEs for the future, and at Amazon, we’ll be working hard to support and champion their success.”

Source: Amazon UK Press Release

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.